Tips on arbitrage

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5 min readJan 2, 2024
3.2% price difference on SOL vs ARB (camelotV3)

Before you proceed with Arbitrage you need to understand why it exist in the 1st place. This kind of opportunity is what I call “too good to be true”. And when it looks too good, you know usually it wont end up as expected. The 2nd thing is, what are your edges? why u can capitalize on it but others wont? and lastly what are the risk and worst case scenario?

If I can answer this 3 question convincingly I will take the trade asap, coz the window of opportunity rarely open for long..

lets get straight to an Example, a recent arbitrage I took when I saw $AURY trading $1.36 at ORCA dex (solana chain)
VS
$AURY trading $1.28 at Camelot dex (Arbitrum chain)

which meant price difference of 5.9%.

1st question: why this huge price difference exist?

Ans:

The main bridge for $AURY token to move across Arbitrum and Solana was closed due to recent hacks on SyncSpace(AURY bridge). Therefore Market Maker (MM) cannot easily move their fund across chains to balance the price, they were limited by their liquidity. The best they could do: is Sell all of their $AURY token on SOL and bridge the USDC to ARBI and buy it back on ARBI chain (remember there’s no route to bridge $AURY). To put simply that’s the logical thing to do, and maybe they did but they don’t have enough fund to close the gap. OR maybe they did’nt, coz they don’t think it was worth the risk (will explain later).

2nd question: how can I take advantage? what are my edges?

Ans:

  1. I am a long term $AURY bag holder, so LTF price movement would not effect me, this is a chance for me to increase my $AURY holding.. quick explanation: If you hold 0 $AURY, you can only buy $AURY on ARBI and send them to SOL to sold them ( which is not possible coz bridge is closed)… And even if the bridge is available, it is kinda risky coz $AURY is a low Mcap coin and price can fluctuate fast. In my experience it will take around 2min to bridge my fund from SOL to ARBI( vice versa). so within than 2mins it is possible for the price to drop 5%. ( I call this carrying risk or transition risk). this is also why professional arbiters don’t move asset solely for arbitrage, they usually do it on the spot, on both chain (or exchange) which mean they need to have money EVERYWHERE..
  2. I am an active member of AURORY so I know exactly what’s going on. and I am confident the bridge will open soon, so i can transfer back my $AURY to my staking account on Solana.. Outsiders don’t know this, or they did’nt think it is worth the risk coz they dont trust the AURORY team( why should them? it been hack 2 time in a week)it is possible the bridge will not get fixed soon… So again, like I explain before this was the risk and I’m okay with it coz I’m in no hurry, I’m a long term holder.

3rd Question what are the risk and worst case scenario?

Ans:

  1. Price fluctuation. As explain earlier I dont have “transition risk” coz I’m a $AURY long term holder.
  2. Bridging fund across chain. Your fund could get stuck at bridges due to alot of factors. So make sure you are familiar with the bridge/ portal you are using. (I have experience where my fund stuck for days, trust me you dont want that happen to you)

So now you understand the risk and decided to proceed with it, let’s get through the arbitrage process.

( If u dont understand Solscan its okay, coz Im not an expert myself lol)

1. I unstaked my $AURY (on solana chain)

Turning 1691 $xAury into 2319 $AURY

2. Swapped that 2319 AURY on JUP DEX https://jup.ag/swap/USDC-AURY

Swapped 2326 $AURY for 3168 USD. (apparently there were extra $AURY in my wallet hence the AURY don’t telly with above)

3. use debridge (https://app.debridge.finance/deswap) to bridge my USDC to Arbitrum.

bridging 3170 USDC from SOL to ARBI
received 3166 USDC on ARBI chain

take notice of the fees! In my example they are 0.017 SOL($1.7) and 4.9 USDC (3170–3166) lost from the swapping/bridging process. In total the bridging cost (so far) is $6.6

4.Swapped the USDC arrived on ARBI to AURY using https://app.camelot.exchange/

swapped 3166USDC for 2462 $AURY

5. Sent those AURY to Syncspace to standby to bridge back to $SOL

As you can see after the 5 step we took, I managed to turn my AURY from 2326 to 2462 ( 5.8%) which equal to +136 AURY.. at current price that’s $160 for 5min of work.

what’s left is wait for AURORY team to fix the bridge and I will send those $AURY back into my staking account which give me 5% annual APR%.

If u noticed, all I did was to get the APR in advanced. in fact that’s what I was thinking . Instead of letting it staked for 1 year to get that 5%, why don’t I just take this 5 extra step and get that 5%, it only take 5min anyway..

THE END

Disclaimer: this is not financial advise, I dont have degree in finance whatsoever, I’m just sharing my mode of thinking when I’m degening on DEX.

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